Impact of ASEAN-India FTA on India's plantation commodities: A Simulation analysis
AbstractThe present study attempts a quantitative assessment of the impact of recently signed ASEAN-India FTA (AIFTA) for selected plantation commodities (coffee, tea and pepper) in India. We use partial equilibrium modeling approach (SMART model and gravity model) to simulate the likely import increase of the plantation commodities under the proposed tariff reduction schedule of the AIFTA. Overall, the results suggest that the AIFTA will cause significant increase in India's import of plantation commodities. The increase in imports is mostly driven by trade creation rather than trade diversion. From the economic efficiency point of view, trade creation improves welfare as the new imports replace the high-cost domestic production. The analysis shows that the proposed tariff reduction may lead to significant tariff revenue loss to the government. However, the gain in consumer surplus (due to the fall in domestic price and the consequent reduction in dead-weight loss) outweighs the loss in tariff revenue leading to net welfare gain. By and large, the simulations based on the SMART and gravity models provide similar results on the magnitude of total increase in imports. The surge of new imports may have adverse impact for the livelihood of the Indian farmers engaged in the production of these commodities. Farmers will have to realign the structure of production according to the changing price signals and hence it is critical to provide adjustment assistance to the affected farmers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2010-04.
Length: 22 pages
Date of creation:
Date of revision:
Contact details of provider:
Postal: Gen. A. K. Vaidya Marg, Goregaon (E), Mumbai 400065
Phone: (022) 840 0919/20/21
Fax: (022) 840 2752/2026
Web page: http://www.igidr.ac.in
More information through EDIRC
SMART Model; Gravity Model; Simulation Analysis;
Other versions of this item:
- Gordhan K Saini & C. Veeramani, 2010. "Impact of ASEAN-India FTA on India’s Plantation Commodities: A Simulation Analysis," Working Papers id:2477, eSocialSciences.
- F10 - International Economics - - Trade - - - General
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barry Eichengreen & Douglas A. Irwin, 1998.
"The Role of History in Bilateral Trade Flows,"
in: The Regionalization of the World Economy, pages 33-62
National Bureau of Economic Research, Inc.
- Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2004.
"Import Demand Elasticities and Trade Distortions,"
CEPR Discussion Papers
4669, C.E.P.R. Discussion Papers.
- Fidrmuc, Jan & Fidrmuc, Jarko, 2000.
"Disintegration and Trade,"
CEPR Discussion Papers
2641, C.E.P.R. Discussion Papers.
- Jarko Fidrmuc & Jan Fidrmuc, 2001. "Disintegration and Trade," LICOS Discussion Papers 9901, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Jarko Fidrmuc & Jan Fidrmuc, 2000. "Disintegration and Trade," William Davidson Institute Working Papers Series 353, William Davidson Institute at the University of Michigan.
- Fidrmuc, Jarko & Fidrmuc, Jan, 2001. "Disintegration and trade," ZEI Working Papers B 24-2001, ZEI - Center for European Integration Studies, University of Bonn.
- James Harrigan, 2001.
"Specialization and the volume of trade: do the data obey the laws?,"
140, Federal Reserve Bank of New York.
- James Harrigan, 2001. "Specialization and the Volume of Trade: Do the Data Obey the Laws?," NBER Working Papers 8675, National Bureau of Economic Research, Inc.
- Edward E. Leamer & James Levinsohn, 1994.
"International Trade Theory: The Evidence,"
NBER Working Papers
4940, National Bureau of Economic Research, Inc.
- Sawkut Rojid, 2006. "COMESA trade potential: a gravity approach," Applied Economics Letters, Taylor & Francis Journals, vol. 13(14), pages 947-951.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar).
If references are entirely missing, you can add them using this form.